Rail Rates

Aaron asks the question, <a href="http://treasurestatejudaism.blogspot.com/2006/03/controversial-question-are-high.html">"are High Railroad Rates Good or Bad for Montana?"</a> He specifically asked me for my opinion as an agricultural producer. Why you ask a cattle rancher who got out of wheat production because of it's impending profitability a question about freight rates of wheat is beyond me but I can throw my opinion out for all to hear.<br />n<br />nIf high rail rates were good for Montana, since it would provide incentive to finish more of the product here in the state, it seems to me like it would have all ready happened. The rail rates have been extremely high comparatively for over 30 years so and vertical integration should have happened all ready. We do see a couple of enterprises such as Wheat Montana and Pasta Montana making a go of it and doing very well at it but that is about it. Why is this? Why hasn't there been more vertical integration?<br />n<br />nThese are questions I can't answer. Are the farmers just lazy and don't want to do it, or are they so cash strapped due to the high rail rates they can't see the free cash to do it? Maybe this is the case, with relief from the high rail rates they would have the free cash to pursue a vertical integration venture. More than likely though they would use the cash to pay down debts they are carrying from years of drought and high rail rates.<br />n<br />nDo the farmers need to branch out away from wheat in the state and look for some other value added crop to raise and boost them selves up that way? It wouldn't hurt, it would pull them away from the high rail rates for wheat and cause people to explore new possibilities. Can they afford to do this? That's' a bigger question. You get away form a government approved crop and you lose all your farm subsidies and a lot of the farmers need those subsidies to stay in the game. Change crops, lose subsidies. Lose subsidies, lose the farm. Pretty vicious circle to be staring in the face. It's not very appealing to switch crops if you are the one looking at losing your farm.<br />n<br />nThere is no easy answers when it comes to rail rates. Are they high? Yes. Is the state right to sue to lower them? I don't know. You can only get the vertical integration if the farmers have the money to do it. With the high rail rates they don't have the money. Catch-22. <br />n<br />n<br />n<b>The question of whether it